WASHINGTON – Warned that time was running short to bolster the distressed economy, congressional Republicans and Democrats reported agreement in principle Thursday on a $700 billion bailout of the financial industry, and said they would present it to the Bush administration in hopes of a vote within days.
Emerging from a two-hour negotiating session, Sen. Chris Dodd, D-Conn., said, "We are very confident that we can act expeditiously."
"I now expect that we will indeed have a plan that can pass the House, pass the Senate (and) be signed by the president," said Sen. Bob Bennett, R-Utah.
The bipartisan consensus on the general direction of the legislation was reported just hours before President Bush was to host presidential contenders Barack Obama and John McCain and congressional leaders at the White House for discussions on how to clear obstacles to the unpopular rescue plan.
Key lawmakers said at midday that few difficulties actually remained.
"There really isn't much of a deadlock to break," said Rep. Barney Frank, D-Mass, chairman of the House Financial Services Committee.
But Rep. Spencer Bachus, R-AL, the top Republican on Frank's committee, told FOX News "there is no deal yet," although he conceded there was progress.
House Democrats suggest that the Republicans are unwilling to sign off on a deal until it has McCain's blessing.
Bachus said one sticking point is that Democrats are asking for buying back paired assets from a few Wall Street firms. Republicans would prefer helping smaller, Main Street banks, he said.
House Minority Leader John Boehner, R-OH, agreed with Bachus.
"I am encouraged by the bipartisan progress being made toward an economic package that protects the interests of families, seniors, small businesses and all taxpayers. However, House Republicans have not agreed to any plan at this point," Boehner said in a written statement.
"We owe it to all those with a stake in this process to continue our discussions until we arrive at an agreement that is acceptable on both sides of the aisle — and more importantly, one that serves the interests of American taxpayers," he added.
Bush told the nation in a televised address Wednesday night that passage of the package his administration has proposed is urgently needed to calm the markets and restore confidence in the reeling financial system. His top spokeswoman, Dana Perino, had told reporters earlier Thursday that "significant progress" was being made.
Financial markets were mixed in early trading; the Dow Jones industrial average rose more than 200 points on optimism about the deal but a credit market squeeze remained as doubts about the proposed plan's effectiveness drove demand for short-term, safe-haven assets.
House Speaker Nancy Pelosi, D-Calif., said Bush's agreement with Democrats on limiting pay for executives of bailed out financial institutions and giving taxpayers an equity stake in the companies cleared a significant hurdle.
The core of the plan envisions the government buying up sour assets of shaky financial firms in a bid to keep them from going under and to stave off a potentially severe recession.
Even as political figures haggled over the shape and price of the bailout, new economic indicators showed that orders for big-ticket manufactured goods plunged in August by the largest amount in seven months and that new applications for unemployment benefits were at their highest level in seven years.
And new home sales tumbled in August to the slowest pace in 17 years, while the average sales price fell by the largest amount on record. It served to further dramatize the problem that Washington is trying to solve.
Bush acknowledged Wednesday night that the bailout would be a "tough vote" for lawmakers. But he said failing to approve it would risk dire consequences for the economy and most Americans.
"Without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold," Bush said as he worked to resurrect the unpopular bailout package. "Our entire economy is in danger."
Bush's warning came soon after he invited Obama and McCain, one of whom will inherit the economic mess in four months, as well as key congressional leaders to a White House meeting Thursday to work on a compromise.
With the administration's original proposal considered dead in Congress, House leaders said they were making progress toward revised legislation that could be approved.
Paulson and Federal Reserve Chairman Ben Bernanke have been crisscrossing Capitol Hill in recent days, shuttling between public hearings on the proposal and private meetings with lawmakers, to sell the proposal.
Obama and McCain are calling for a bipartisan effort to deal with the crisis, little more than five weeks before national elections in which the economy has emerged as the dominant theme.
"The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail," they said in a joint statement Wednesday night. "This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe."
Presidential politics intruded, nonetheless, when McCain said earlier Wednesday he intended to return to Washington and was asking Obama to agree to delay their first debate, scheduled for Friday, to deal with the meltdown.
Obama said the debate should go ahead.
Lawmakers in both parties have objected strenuously to the rescue plan over the past two days, Republicans complaining about federal intervention in private business and Democrats pressing to tack on more conditions and help for beleaguered homeowners.
But many in both parties said they were open to legislation, although on different terms than the White House has proposed.